The EUR/USD pair is recovering for the third consecutive session, balancing between US dollar weakness amid the threat of a government shutdown and limited demand for the euro due to negative economic data in the eurozone.
Possible technical scenarios:
As we can see on the daily chart, EUR/USD shows a corrective rise toward the 1.1745-1.1788 area. If the price fails to overcome it since there is a series of lower highs, it could lead to a downward reversal toward 1.1589, marked with a dotted line, and 1.1494.
Fundamental drivers of volatility:
EUR/USD is caught between opposing forces. The dollar is pressured by policy and fiscal uncertainty, while the euro lacks strong fundamental support for sustained growth.
The risk of a US government shutdown undermines confidence in the dollar, as key macroeconomic reports, including the employment report, could be delayed. This reduces the dollar’s appeal but increases overall market uncertainty.
Donald Trump’s trade rhetoric is adding pressure: new tariffs on timber and furniture are fueling tensions and weighing on overall risk sentiment. With global caution rising, demand for risky assets is limited, and the euro is also lacking support from local data. Germany’s declining retail sales and falling import prices are intensifying worries about the region’s economic recovery.
In the days ahead, the key drivers will be German inflation data and US labor market statistics, which could set the direction for the pair. Until then, sideways movement is the most likely scenario.
Intraday technical picture:
Judging by the unfolding scenario on the 4H chart, EUR/USD has entered the resistance area between 1.1745 and 1.1788, retaining potential for further recovery before a possible downward reversal. An alternative scenario is consolidation above 1.1788, opening the path for a rise toward 1.1898 if dollar weakness continues.
The GBP/USD pair is recovering modestly amid dollar weakness and a muted response to UK GDP data.
Possible technical scenarios:
The daily chart shows that GBP/USD has reached the resistance at 1.3436. A breakout of this level and consolidation above it could open the path toward the next target of 1.3630. Alternatively, a reversal from 1.3436 could lead to a medium-term decline toward 1.3147.
Fundamental drivers of volatility:
The pound posted only a modest gain on Tuesday after the release of UK second-quarter GDP figures. The economy grew by 0.3% quarter-on-quarter, in line with expectations, confirming the recovery’s strength. Still, the market largely brushed off the data as focus turned to more troubling signals.
The UK’s current account came in much worse than forecast: the deficit widened to £28.9 billion (3.8% of GDP) compared to the expected £24.9 billion and 2.8% in Q1. This raised fresh concerns about structural weaknesses in the economy.
For the dollar, the outlook remains pressured: risks of a US government shutdown and Donald Trump’s new tariff plans continue to drag on the currency, limiting upside potential. Yet, with the UK deficit widening sharply, investors are cautious about the pound’s outlook, explaining GBP/USD’s muted response to upbeat GDP data.
As a result, dollar weakness tied to political uncertainty and pound pressure from the trade gap support a consolidation scenario, with direction in the coming days hinging on US labor market data and Congressional budget developments.
Intraday technical picture:
According to the 4H chart, GBP/USD is trading at 1.3436, but it is unclear which side of this level will hold. The pair’s next move will depend on how the price consolidates relative to this horizontal.
The USD/JPY pair fell to 148.00 amid sustained selling of the US dollar and stronger demand for the yen.
Possible technical scenarios:
Judging by the look of things on the daily chart, USD/JPY has returned to the 145.91-148.63 range after failing to exit it upwards. The pair currently has sufficient room to move toward the 145.91 support. If this level is reached, a rebound upward and continuation of sideways trading within this range are possible.
Fundamental drivers of volatility:
Despite weak industrial output and retail sales figures in Japan, markets are still betting on the Bank of Japan moving forward with policy normalization. The split views in the central bank’s minutes haven’t changed expectations. A rate hike remains possible as soon as October.
The global environment is adding further support for the yen. Risks of a US government shutdown and rising geopolitical tensions are boosting demand for the yen as a safe-haven asset. At the same time, diverging central bank policies are becoming a key factor: the market expects the Federal Reserve to cut rates twice before year-end, while the Bank of Japan could move in the opposite direction with a hike.
This contrast keeps the dollar under pressure and leaves room for yen strength. Even political uncertainty in Tokyo hasn’t shaken sentiment: with BOJ hike expectations and safe-haven demand in play, the base case for USD/JPY remains a further decline, shaped by upcoming US budget and monetary policy decisions.
Intraday technical picture:
On the 4H chart, there is still room for the pair to move toward the 145.91 support. If reached, a price reversal is possible.
The USD/CAD pair continues to consolidate amid conflicting factors: pressure on the US dollar is paired with limited support for the Canadian dollar from oil prices and the domestic economy.
Possible technical scenarios:
As evidenced by the situation on the daily chart, USD/CAD is testing the upper boundary of the 1.3721-1.3924 sideways range, marked by the two dotted lines. If the pair exits upwards, the next upside target will be 1.4013. Otherwise, the pair is likely to decline within this range.
Fundamental drivers of volatility:
The USD/CAD pair is trading under the pull of mixed factors. A weaker US dollar creates room for downside, but softness in Canada’s economy is holding back momentum.
The greenback is under pressure as the risk of a US government shutdown, geopolitical tensions, and rising chances of a Federal Reserve rate cut weigh on sentiment. Expectations of easing make the dollar less appealing, particularly against commodity currencies like the Canadian dollar.
For the loonie, support from domestic data is limited: revised Statistics Canada figures showed GDP growth of 0.2% in July and flat performance in August, easing some concerns about a slowdown. Still, falling oil prices, driven by the return of Kurdish exports from Iraq, add pressure, as increased supply weakens the outlook for the commodity-linked currency.
Until fresh drivers emerge, such as Canada’s inflation and labor market reports or new signals from the Fed, consolidation within the current range remains the most likely scenario.
Intraday technical picture:
The 4H chart demonstrates that USD/CAD has returned to the 1.3721-1.3924 range, from where a decline toward support appears probable.
Oil prices declined amid expectations of another OPEC+ production increase and the resumption of exports from Iraq's Kurdish region via Turkey, raising concerns about oversupply.
Possible technical scenarios:
On the daily chart, Brent is moving toward the lower boundary of its 65.02-69.37 sideways range, with sufficient room to move toward it. Once it reaches 65.02, an upward reversal and a recovery within this range are plausible.
Fundamental drivers of volatility:
Oil sales picked up after reports that exporters, including Russia, may approve a production increase of at least 137,000 barrels per day on Sunday, and that flows from Kurdistan will resume to Turkey for the first time in two and a half years.
Even so, traders remain cautious: alongside risks of supply disruptions from geopolitical tensions, including attacks on Russian refineries, the market is weighing the possibility of oversupply and weak demand. A potential peace deal in Gaza, which could restore normal traffic through the Suez Canal, may also ease the geopolitical risk premium.
On top of this, uncertainty in the US is pressuring prices, as the looming threat of a government shutdown is curbing oil demand. Taken together, these factors are fueling bearish sentiment and limiting price growth, despite steady energy consumption.
Intraday technical picture:
On the 4H chart, Brent’s consolidation below 66.51 opens the path for a move down to the nearest support at 65.02.
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